Looking at trading the Dax 40 using Bollinger bands, fib retracement levels, and engulfing candles.
The Dax is currently sitting on a crucial daily support zone. Most assets across the financial market spectrum are all breaking crucial support levels. This is why I am not choosing to jump into any positions for the time being. These levels are a bit dangerous and I would rather wait to see what price does
If the price breaks through this support zone, I can then start looking for short setups.
However, if the price bounces off of this level and forms smaller and smaller bearish candles and then prints a large bullish engulfing candle, I would have some confluence to go long.
My Bollinger Bands strategy has been published a few times and is currently in a forward testing state.
We wait for the price to pierce through one side of the Bollinger bands. We then wait for an engulfing candle to appear taking out previous support/resistance. Once we see this, we use our fib retracement levels on the engulfing candle itself. We enter on the 0.236 fib level. Our stop goes a few pips above or below the 1 fib level. Our targets will be the other side of the Bollinger bands. However, we need to make sure we get a decent risk to reward of at least 1 to 2. Swinging in the 4-hour time frame requires patience and since we are mostly practicing sitting on our hands, we want to make sure we get the most possible return for our risk.
Now, I have been testing out this strategy in the 15-minute time frame as it works very very well. I will leave that for another time.
Remember, we are waiting to see if the price will hold above this crucial daily support level and we want to then see the bearish candles become smaller and smaller.
Small candles will prove to us that the bears are weakening and that the market is slowing down.
If we see a Doji candle, we will know that the market is undecided and this could add some confluence to a reversal.
We also have divergence playing out across the MACD, which shows us that the bears are weakening out.
Bollinger bands are a great tool to use. Do not use them solely on your own. Use them to help add confluence and confidence to any particular setup or pattern that you are trading.
I hope you all have a fantastic weekend and I will be seeing you all in the next one.
The Vortex Trader
The Dax is currently sitting on a crucial daily support zone. Most assets across the financial market spectrum are all breaking crucial support levels. This is why I am not choosing to jump into any positions for the time being. These levels are a bit dangerous and I would rather wait to see what price does
If the price breaks through this support zone, I can then start looking for short setups.
However, if the price bounces off of this level and forms smaller and smaller bearish candles and then prints a large bullish engulfing candle, I would have some confluence to go long.
My Bollinger Bands strategy has been published a few times and is currently in a forward testing state.
We wait for the price to pierce through one side of the Bollinger bands. We then wait for an engulfing candle to appear taking out previous support/resistance. Once we see this, we use our fib retracement levels on the engulfing candle itself. We enter on the 0.236 fib level. Our stop goes a few pips above or below the 1 fib level. Our targets will be the other side of the Bollinger bands. However, we need to make sure we get a decent risk to reward of at least 1 to 2. Swinging in the 4-hour time frame requires patience and since we are mostly practicing sitting on our hands, we want to make sure we get the most possible return for our risk.
Now, I have been testing out this strategy in the 15-minute time frame as it works very very well. I will leave that for another time.
Remember, we are waiting to see if the price will hold above this crucial daily support level and we want to then see the bearish candles become smaller and smaller.
Small candles will prove to us that the bears are weakening and that the market is slowing down.
If we see a Doji candle, we will know that the market is undecided and this could add some confluence to a reversal.
We also have divergence playing out across the MACD, which shows us that the bears are weakening out.
Bollinger bands are a great tool to use. Do not use them solely on your own. Use them to help add confluence and confidence to any particular setup or pattern that you are trading.
I hope you all have a fantastic weekend and I will be seeing you all in the next one.
The Vortex Trader
